Financial strength of many businesses has been damaged by the apparent absence of insurance to provide protection in the event of a pandemic. Totus Re has welcomed the call from the Chartered Insurance Institute for the industry to establish an approach to pandemics and other systemic risks that clearly sets out the scope of government intervention.
- Court finds in favour of the arguments advanced for policyholders by the FCA on “the majority” of the key issues in the business interruption (BI) insurance test case brought by the Financial Conduct Authority (FCA) in the wake of the pandemic.
- Despite this, UK businesses remain at risk of being unable to secure insurance.
- Collective calls on the insurance industry to act now to avoid test cases in the future.
- Totus Re model would create a private/ public structure, which would remove the Government from finding itself as the insurer off last resort.
LONDON (15/09/20) –In this time of need individuals and businesses risk finding themselves unable to acquire some vital insurance products such as business interruption.
The results of the business interruption (BI) insurance test case brought by the Financial Conduct Authority (FCA) in the wake of the pandemic have bought some much needed clarity around claims for the insurance industry, but many businesses still find themselves at risk of being unable to secure business interruption insurance at their next renewal.
The insurance sector is actively seeking to repair its damaged reputation and to tighten policy wordings to avoid future such damage. Totus Re sees this as is reactionary behaviour when many others in the market believe that proactive behaviour is desperately called for.
It’s time for generational thinking – we’ve invested many hours sounding out the market as to our strategic goal – and a solution has arisen that seems to have initial viability. We believe now, following this test case it’s time to break cover and accelerate the conversation.
Co-Founder Liz Foster says: “As UK business look to re-establish a version of normal, we want to make sure they are adequately supported by the insurance industry to allow them the confidence to get back on track.
“We welcome the call from the Chartered Insurance Institute to establish an approach to systemic risks that clearly sets out the scope of government intervention. The Totus Re model would create a new institution, which would buffer the Government from finding itself as the insurer off last resort but with no income to fund its payments.
“My request to the CII and other professional bodies is to please use the powerful voice of your organisation to call upon the Chancellor and Bank of England to constructively explore the viability of the Totus Re model, which I and my colleagues look forward to sharing with the sector for a robust appraisal of its merits and challenges.”
Pandemic as a risk is included in the National Risk Register along with other category red risks such as cyber and climatic hazards. Any of these so-called ‘red zone’ hazards could once again create serious financial damage to business, to society and to the Government.
The solution lies in Totus Re’s concept – which could see the creation of a new technocratic institution, with the opportunity to consolidate national risk strategy and related policy instruments. The core group have progressed from identifying the need for such an institution to conceiving what it might do in practical terms and how it would function. The concept has been shared with several experts and, despite being embryonic, has been met largely with cautious validation so far.
27 years ago, Pool Re was created to provide insurance against the risk of terrorism which had become otherwise uninsurable. Pool Re has created financial security, and therefore financial confidence, for society when acts of terrorism strike our community.
Flood Re now exists to support the UK when floods strike our community.
Whilst both Pool Re and Flood Re were created retrospectively, given the information within the National Risk Register Totus Re believes that we cannot waste any more time in developing a proactive solution that can flex to react in real time to all risk scenarios – not just the most available examples.
The group pledge to share a strategy paper before the end of the month – in light of the ongoing fallout from the pandemic.
Brandon Consulting Services Ltd 